Foreign fund flows into Chinese equities lose steam even as stocks hit 10-year high
Chinese equities record net inflows of US$900 million in August, down from US$2.7 billion in July, Morgan Stanley says
Foreign buying of Chinese stocks continued for a third month in August, albeit at a slower pace, as long-only funds increased their exposure to the mainland’s US$12.3 trillion stock market following a key benchmark’s rise to a 10-year high.
Inflows from US and European funds into Chinese equities eased to US$900 million in August from US$2.7 billion in July, according to a Morgan Stanley report on Thursday. Passive funds logged inflows of US$1.4 billion. Meanwhile, active funds recorded outflows of US$500 million, the lowest since mid-2023.
The numbers brought the year-to-date cumulative foreign long-only fund inflows to US$1 billion compared with outflows of US$17 billion a year earlier.
“We observe stronger engagement from high-net-worth investors [in onshore private funds], alongside early signs of rotation from money market funds to equity funds,” Morgan Stanley said in the report. “Retail activity picked up slightly but remains well below previous peaks.”
Global and emerging-market funds reduced their underweight positions in China, while funds from Asia, excluding Japan, shifted from underweight to overweight, according to data compiled by the US bank.